Nova Scotia economy in better shape to weather recession, Dal professor says
Lars Osberg says it's key to keep consumer confidence high in recession
An economist at Dalhousie University says Nova Scotia's economy could weather a downturn better than other parts of Canada.
Lars Osberg, a Dalhousie professor, made the comments following news that the country's economic output shrunk slightly over the past six months.
That signals a technical recession.
Nova Scotia has roughly 450,000 workers — more than half of which work in the top five sectors of health care, trade, education, construction and food/accommodation.
Osberg says the health care and education sectors are less vulnerable to a downturn because they're publicly funded. But other top local employers, like the construction industry, can suffer if the economy continues to contract.
"We're definitely affected by what happens in the rest of the country," he said. "So if the construction thing goes bust in the rest of the country, we'll be affected. But not as much."
Osberg says it's because Nova Scotia has avoided the huge spike in housing prices seen in Toronto and Vancouver.
"We are much less vulnerable than other urban markets across Canada. That doesn't mean we're invulnerable. There is no such thing as invulnerability to economic business cycles."
Osberg says maintaining consumer confidence is key because irrational consumer fear can turn a downward blip into a longer slide.
"What's good for me-me-me is cutting back on spending. If all of us do that individually, then there isn't a whole lot of spending out there and there isn't a whole lot of job creation."
The question of consumer confidence hits home with Gordon Stewart, the Executive Director of the Restaurant Association of Nova Scotia.
"Our biggest fear is that in the local market people will start to be concerned, and start to tighten up their wallets because the food and beverage sector is one of the first sectors where they tighten up," he said.
"And we saw that in 2008. It was like an instant downturn in the economy for restaurants."
Osberg said there's a parallel between consumer confidence, and the recent gas shortage. Once people worry about running out of gas, everyone fills up their tank at once, and we run out.
In the same way, he says if households suddenly go on a tight budget en masse, Canada could see a sharper economic decline in the coming months.